6 Easy Ways Businesses Can Reduce Operating Costs


Running a small business can be quite challenging due to low capital and tight budget constraints. So. reducing operational costs will help you to make better use of your business resources and increase your profits. The following tips will help you to discover areas where you can start making substantial cost savings.

1. Use Technology to Save Time and Effort

Take advantage of the wide variety of software programs and web services to automate some of your time-consuming business operations. For instance, marketing, communications, payroll, accounting, document storage and sharing, and many others can be handled using applications that will save you many man hours each week. To know the right operations or tasks to automate, select the tasks that are not part of your core business, and those you are not well trained for or naturally endowed to do.

2. Outsource Some Business Practices

In some cases, you may be able to save more money and get a better return on your investment by outsourcing instead of depending on technology. One major aspect of business where you can derive maximum benefit from outsourcing is marketing. If you have spent a lot of money on advertising and you have not received your expected return on investment, you should consider hiring a professional marketing outfit to handle your marketing campaign for you.

3. Adopt Green and Energy Efficient Practices

Make your office space as environmentally friendly as possible. Make efforts to reduce your energy bills. Use LEDs or compact fluorescent tubes instead of conventional fluorescent lighting. Improve the insulation of your doors and windows to reduce money spent on climate control. Where possible, use solar panels to charge your gadgets and to provide lighting. You may also contact your utility company and ask for a special rebate on energy bills. If you can’t find your particular company’s number, you can always use one of the many directories for energy company numbers available on the web.

4. Allow Your Employees to Telecommute

Instead of spending your limited capital on renting office space and paying for energy and utilities, you should explore telecommuting. This is particularly beneficial when you are offering information-based services and your staff can perform the same office functions from a remote location. You and your employees will save a lot of the money and time, which you will normally spend commuting to and from work every day.

5. Search for Inefficiencies and Eliminate them

Efficiency saves cost. But it takes some knowledge and experience to analyze your business processes in order to eliminate waste of time, effort and resources. Apply the Pareto principle or the 80/20 rule. List out all your business processes in descending order of cost. Then focus on the top 20% that are consuming up to 80 percent of your total cost. Reducing waste in this top 20 percent will have a significant impact on your business costs.

6. Stop Paying for Unused Services

Make sure you monitor your credit account statements and eliminate any subscriptions that are deducting money for services you are no longer using. For instance, you may have paid online for VPN services, business magazines, etc. Take a close look at all the expenses you have incurred over the last six months, if you notice you are paying for services that you have not used in the last three months, take steps to cancel your subscription.

Bottom Line

Cutting the cost of business operations may not always be a simple task but it is very rewarding. Once you successfully reduce a particular cost, it will help you to save money regularly. Then you can invest the savings in a new business asset or use it to take better care of your employees.

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About the Author

Megan Totka

Megan Totka is the Chief Editor for ChamberofCommerce.com. As a small business expert, Megan specializes in reporting the latest business news, helpful tips and reliable resources, as well as providing small business advice.

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